Volatile market has been bad news for IPOs

— -- Q: Are fewer companies entertaining the idea of going public and launching IPOs now that the stock market is so choppy?

A: Companies couldn't file their plans to sell stock to the public fast enough when the market was flying in the early summer.

Company executives like to cash in with initial public offerings when the going is good. They want to get the biggest chunk of cash when selling their company to the public as possible. So it's only natural many companies rushed to their investment bankers when stocks were soaring asking about IPOs.

The data tell the story. The number of companies filing their plans for IPOs ticked up in April, May, June and July. The number of IPO filings those months were 35, 32, 23 and 33 respectively, says Renaissance Capital. That's well above the number of deals filed a year ago in the same months of 29, 26, 22 and 22.

But the stock investors' taste for risk took a serious setback in July and August. Concerns about the slowing economy in Europe plus the debt ceiling debate and risk of lower government spending put the chill on stocks and pushed the market into a correction.

Investors' reluctance to take on risk has been bad news for IPOs. Remember that IPOs trail the stock market. Only when investors are feeling confident about the economy and confident about buying stocks that are already listed are they ready to entertain issues of new stocks.

Additionally, CEOs and investors in private companies don't want to sell into a fire sale when stock prices are depressed. The number of companies filing for IPOs in August so far is 21, Renaissance says, which is down from the clip of previous months. Furthermore, 11 companies withdrew their plans to go public in August, Renaissance says, well above the three that canned plans in July and the highest level since December 2008.

But it's too soon to pronounce another deep freeze of IPOs. For one thing, some brave companies continue to try their luck with the reluctant market. Online video company Brightcove, chemical company Genomatica, energy firms Laredo Petroleum and Inergy Midstream, social networker Jive Software and software company Eloqua have all filed to go public in late August, Renaissance says.

The true test will come in the fall, after buyers return from vacation, and the market has a chance to establish its direction. If stocks find their footing, expect the full pipeline of IPOs to give investors lots of new options. But if the market stumbles, investors could be in for a period of slow filings.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Follow Matt on Twitter at: twitter.com/mattkrantz